Wednesday, 12 November 2014

Free movement and social benefits for economically inactive EU citizens: The Dano judgment in historical context

Géraldine Renaudière, Trainee at the
CJEU, within the cabinet of the Court Vice-President, Koen Lenaerts. (This post reflects the author's view only).

In yesterday’s judgment in Elisabeta Dano and Florin Dano v
Jobcenter Leipzig, the CJEU once again addresses the highly sensitive issue
of the exclusion by national legislation of economically inactive Union citizens, from special non-contributory cash
benefits, although these are provided to nationals of the respective Member
States who are in the same situation. One year after its controversial Brey decision, the Court attempts
to redefine the relationship between two primordial EU law instruments: Directive 2004/38 on the right of citizens of the Union to move and reside freely
within the territory of the Member States (the citizens’ Directive) and Regulation 883/2004 on the coordination of social security systems. The
broader political context of the judgment has been discussed in the separate post by Steve Peers, but it is also important to examine the judgment in
the historical context of the development of the case-law on EU citizens'
access to benefits.

Background

In this regard, it might be noted that
although the Maastricht Treaty marked an important milestone in the field of
free movement of persons by expanding the right to move and reside freely
within the EU (formerly the exclusive preserve of people exercising an economic
activity) to all Union citizens, the traditional “economically-oriented”
approach has never entirely disappeared from the EU legal landscape. So the right
of free movement remains subject to limitations and conditions, as laid down in
Articles 20, (2) and 21 TFEU. On several occasions, the CJEU was called upon to
clarify those conditions (now specifically provided by Directive 2004/38) while
at the same time it had to deal with the closely related issue of the (equal)
access for EU citizens to social assistance and minimum subsistence benefits in
the State of residence.

The least one can say is that, so far,
the Court hardly achieved the right balance between the rights of economically inactive
migrants and the legitimate interest of Member States to protect their welfare
systems from so-called benefit tourism. Even more, it has caused further confusion
regarding the very existence of a “right” to social benefits for European
students, retired people or in a particular state of need. The question now is
whether the Dano judgment departs
from the previous logic and to what extent it ensures greater legal certainty
and a fairer balance of the interests at stake.

Judgment

In the case at hand, the Sozialgericht Leipzig of Germany
requested a preliminary ruling in a case concerning the refusal from the German
authorities to grant Mrs. Dano and her son, Romanian nationals and non-economically
active, subsistence benefits, social allowance as well as contribution to
accommodation and heating costs. In reply to questions raised by the national
judge, the Court starts to recall that such “special non-contributory cash
benefits” fall within the scope Article 4 of Regulation 883/2004. This provision,
corresponding to the specific expression of the principle of non-discrimination
embodied in Article 18 TFEU (applying to Union citizens who invoke in the host
Member State such category of social benefits) must however in the present case
be interpreted in the light of Article 24 of Directive 2004/38 which sets out
an equal treatment rule for Union citizens exercising their right to move and
reside freely within the EU territory.

Essentially following the Advocate
General’s observations, the Court admits for the first time that when it
is apparent that the applicant does not meet the conditions set out in Article
7(1) of Directive 2004/38 (i.e. does
not have sufficient resources to meet his own basic needs and the needs of his
family) he does not fall within the scope ratione
personae of Article 24(1) and (2) of the Directive. Therefore, as far as
social benefits are concerned, a Union citizen is not entitled to claim equal
treatment with nationals of the host Member State once it is established that
his right of residence in the territory of that State does not comply with the
conditions of the Directive 2004/38.

Comments

In a series of judgments rendered prior
to the entry into force of Directive 2004/38, the usual approach adopted by the
CJEU was to consider the right to equal treatment and non-discrimination on
grounds of nationality in the host State as the corollary of the status of citizen
of the Union, both principles being consecrated by the TFEU (see the Martinez Sala judgment). In that
sense, it enabled those who found themselves in the same situation to enjoy the
same treatment in law, irrespective of their nationality, and therefore to be
granted social assistance benefits (minimex
or family benefits) independently of a right to reside and to move freely
within the territory of the Member States in the meaning of EU Law (see the Grzelczyk and Trojani judgments). Regarded as a cornerstone of Union citizenship,
only restrictive and proportionate differential treatments were deemed
acceptable whilst forgetting that Article 18 TFEU additionally requires a
situation to fall “within the scope of
application of the Treaties”.

Having been criticised for this “too
generous” approach, the Court progressively allowed more flexibility to Member
States which, depending on the case, could render the access to social benefits
for economically inactive EU migrants conditional upon the demonstration of a
genuine link to the employment market (Collins
and Vatsouras), a certain degree of
integration into the host society by the person concerned (Bidar and Forster) or temporary financial difficulties
unlikely to place an unreasonable burden on the State’s public finances (Grzelczyk again).

While this balanced and individual
approach is to be welcomed, this case-law, still referring to vague and general
concepts and leaving a wide margin of appreciation to national authorities,
somewhat undermined the legal certainty and predictability of the Court’s
decisions. Yet the Court adopted the same logic in Brey, albeit the issue at stake was a bit more complex. In that
case, a compensatory supplement was refused to a retired German national on the
ground that he didn’t have sufficient resources to establish his lawful
residence in Austria in the meaning of Article 7 (1) (b) of Directive 2004/38 while
the benefit requested was listed among the “special non-contributory benefits” provided
by Regulation 883/2004.

According to the Court in its Brey judgment, Member States remain free
to determine the conditions to be met in order for inactive EU migrants to
receive such benefits, notably having a legal right to reside for more than
three months within the meaning of EU law. But paradoxically, when assessing
whether such conditions have been fulfilled, national authorities must take
into account additional elements, especially the social benefit requested (in
this case, intended to ensure minimum means of subsistence of the person
concerned: see Skalka) and assess
whether being eligible for such benefit could jeopardize the right of residence
of the migrant and place an unreasonable burden on the national social
assistance system as a whole.

In such circumstances, it appeared almost
impossible to clearly define the beneficiaries of those special non-contributory
benefits. On the contrary, the judgment in Dano
(also dealing with the relationship between the Directive and the
Regulation, especially in terms of equality of treatment) is much less
confusing on that point: Member States can decide to exclude inactive European
Union citizens from accessing non-contributory benefits when they do not have a
proper right of residence pursuant to Article 7(1) of Directive 2004/38. More
importantly, the condition of having sufficient resources not to become an
“unreasonable” burden on the social assistance system of the host Member State,
is to be appreciated in the light of individual circumstances but without
taking into account of the social benefits claimed.

By proceeding in this way, the Court clearly
distinguishes people who have acquired a legal right of residence of more than
three months, but who, owing to circumstances, are temporarily unable to
fulfill the necessary conditions, from people who have arrived in a Member State
without fulfilling such conditions and are therefore not entitled to rely on
equality of treatment to get (unconditional) access to such benefits. Any other
interpretation would, in the Court’s view, defeat the object and purpose of the
Directive 2004/38 seeking to prevent
economically inactive citizens from using the host Member State’s welfare
system to fund their means of subsistence.

It remains now to be seen whether this
last case, beyond the legal clarification, will put an end to the practical difficulties
which might result from the interpretation of concepts such as “sufficient
resources” or “unreasonable burden” (when the very right of residence within EU
law is contested or when financial issues of the inactive migrant are no longer
“temporary”…) and whether, in practical terms, a fair and reasonable balance
between EU inactive migrants’ rights and Member States’ legitimate interests
has finally been achieved…

I also think that you are right Laura, after someone has gained legal status, three months is more than enough time to distinguish them. I wonder though how much they would need to provide benefits for all of the migrants. Would the ones with work get better benefits, maybe have access to the unions?

The three months distinction is made in the EU citizens Directive. The CJEU should rule quite soon on access to benefits after this date, in the Alimanovic case. There should be no reason to delay the possibility of any foreign worker becoming a member of a union if he or she wishes to.